Politická ekonomie
Politická ekonomie
Prague Economic Papers
University of Economics, Prague

Prague Economic Papers - Articles first published online

Optimizing the Structure of the European Union Budget Expenditure

DOI: https://doi.org/10.18267/j.pep.698

[full text (PDF)]

Andrii Boiar

Published online: 2. 11. 2018

The article discusses which policies and to what extent should be financed from the EU budget and/or from the national budgets of the EU member states to satisfy the rationale and efficiency point of view. To answer these questions we discuss the existing approaches and apply the most relevant ones (in particular the theory of fiscal federalism and public sector economics) to examine the current structure of the EU budget expenditures. We conclude that there are few EU policies that would be more efficient if they were more fiscally centralized and there is a policy that should be brought down to national (regional) level.

Keywords: budget, budget expenditures, EU, international union, member state, optimal, structure

JEL Classification: F36, F55, G28


Alesina, A., Ignazio, A., Federico, E. (2005). International Unions. The American Economic Review, 95(3), 602–615, https://doi.org/10.1257/0002828054201279

Begg, I. (2000). Reshaping the EU Budget: Yet Another Missed Opportunity? European Urban

and Regional Studies, 7(1), 51–62, https://doi.org/10.1177/096977640000700104

Begg, I. (2016). The EU Budget and UK Contribution. National Institute Economic Review, 236(1), 39–47, https://doi.org/10.1177/002795011623600106

Boiar, A. O. (2014). Revenue-Generating Schemes for International Unions. Journal of Economic Integration, 29(3), 407–429, https://doi.org/10.11130/jei.2014.29.3.407

Boiar, A. O. (2014). Transformation of the EU Budgetary Model under Global Financial Turbulence. Lutsk: Vezha-Druk. ISBN 978-617-7181-64-3.

Boiar, A. O., Shmatkovska, T. O., Stashchuk O. V. (2018). Towards the Theory of Supranational Finance. Cogent Business & Management, 5(1), https://doi.org/10.1080/23311975.2018.1482594

Buchanan, J. M., Tullock, G. (1962). The Calculus of Consent: Logical Foundations of Constitutional Democracy. Ann Arbor, MI: University of Michigan Press. ISBN 10:0472061003.

Buti, M., Nava, M. (2003). Towards a European Budgetary System. European University Institute. Florence Working Paper No 2003/08.

Carruba, C. J. (1997). Net Financial Transfers in the EU: Who Gets What and Why? Journal

of Politics, 59(2), 469–496, https://doi.org/10.2307/2998173

Citi, M. (2015). EU Budget Politics: Explaining Stability and Change in Spending Allocations.

European Union Politics, 16(2), 260–280, https://doi.org/10.1177/1465116515569551

Connolly, S., Munro, A. (1999). Economics of the Public Sector. Essex (England):

Pearson Education Limited. ISBN 978-0130966414.

Danell, T. (2008). The EU Long-Term Budget: Reform and New Priorities. Östersund: ITPS, Swedish Institute For Growth Policy Studies.

Danell, T., Östhol, A. (2008). The EU Long-Term Budget: Reform and New Priorities. Report to the Swedish Ministry of Finance. ITPS, Swedish Institute For Growth Policy Studies.


Ederveen, S., Gelauf, G., Pelkmans, J. (2006). Assessing Subsidiarity. CPB Document, No 133. ISBN 90-5833-299-3.

European Commission (2018). A New, Modern Multiannual Financial Framework for a European

Union that Delivers Efficiency on its Priorities Post-2020. COM(2018) 98 final.

European Commission (2008). Internal Charter for the Evaluation Function in DG ECFIN. Available at: http://ec.europa.eu/economy_finance/publications/pages/publication13113_en.pdf

European Commission (2017). Multiannual Financial Framework Adjusted for 2018. Available at: http://ec.europa.eu/budget/mff/figures/index_en.cfm

Figueira, F. (2008a). A Better Budget for Europe: Economically Efficient, Politically Realistic. Swedish Institute for European Policy Studies (European Policy Analysis), April, Issue 2-2008.

Figueira, F. (2008b). How to Reform the EU Budget? A Multidisciplinary Approach. Utrecht School of Economics. Discussion Paper Series No 7.

Groot, L., Zonneveld, E. (2013). EU Budget Contributions and Expenditures: A Lorenz Curve

Approach. Journal of Common Market Studies, 51(4), 649–666, https://doi.org/10.1111/jcms.12013

Institute for Economic Research (2008). A Study on EU Spending. Final Report. ECORYS

Nederland BV, Netherlands Bureau for Economic Policy Analysis (CPB). Rotterdam.

Majocchi, A. (2008). Theories of Fiscal Federalism and the European Experience. Società italiana di economia pubblica. Working Paper No. 608.

Mattila, M. (2006). Fiscal Transfers and Redistribution in the EU: Do Smaller Member States Get More than Their Share? Journal of European Public Policy, 13(1), 34–51,


Mundell, R. A. (1961). A Theory of Optimum Currency Areas. American Economic Review, 51(4), 657–665.

Musgrave, R. (1959). The Theory of Public Finance: a Study in Public Economy. New York: McGraw Hill. ASIN: B0006AVID2.

Musgrave, R. A. (1969). Theories of Fiscal Federalism. Public Finance, 24(4), 521–532.

Nicolaides, Ph., Talsma, F. (2005). Financing the EU: Options for Reform. EIPAScope, 2, 27–34.

Oates, W. E. (1972). Fiscal Federalism. New York: Harcourt Brace & Jovanovich.

ISBN 978-0155274525.

Oates, W. E. (2005). Toward a Second-Generation Theory of Fiscal Federalism. International Tax and Public Finance, 12(4), 349–373, https://doi.org/10.1007/s10797-005-1619-9

Persson, T., Roland, G., Tabellini, G. (1996). The Theory of Fiscal Federalism: What Does It Mean for Europe? IGIER. Working Paper No. 101.

Schratzenstaller, M. (2017). The Brexit as Opportunity for a Sustainability-Oriented Reform of the EU Budget. ÖGfE Policy Brief 09a’2017. ISSN 2305-2635.

Stiglitz, J. (2000). Economics of the Public Sector. New York: W. W. Norton & Co.

ISBN 978-0393966510.

Tabellini, G. (2003). Principles of Policymaking in the EU: an Economic Perspective. CES

Ifo Economic Studies, 49(1), 75–102, https://doi.org/10.1093/cesifo/49.1.75

Ter-Minassian, T. et al. (1997). Fiscal Federalism in Theory and Practice. Teresa Ter-Minassian, Editor. Washington: International Monetary Fund. ISBN 1-55775-663-5.

Tiebout, C. (1956). A Pure Theory of Local Expenditures. Journal of Political Economy, 64(5), 416–424, https://doi.org/10.1086/257839

Tinbergen, J. (1952). On the Theory of Economic Policy. Amsterdam: North-Holland Pub. Co.

ISBN 978-0-7204-3130-8.

Wildavsky, A. (1961). Political Implications of Budgetary Reform. Public Administration Review, 21(4), 183–190, https://doi.org/10.2307/973628

Zaporozhets, V., García-Valiñas, M., Kurz, S. (2016). Key Drivers of EU Budget Allocation:

Does Power Matter? European Journal of Political Economy, 43(C), 57–70,